Market sentiments were positive as investors sensed that central banks could announce monetary easing measures to strengthen the global economy. Investors feel that the intensifying crisis in the euro zone, coupled with signs that the U.S. economic recovery is faltering, has increased the need for the Fed to announce more monetary stimulus urgently.

There is also hope that Greece could still stay within the euro zone even if the anti-bailout parties are elected Sunday.

Adding to the expectation for monetary easing is the sense that inflationary pressures are easing globally. There was a positive development on the price front, however, with average costs faced by worldwide private sector firms rising at the weakest rate in the current 34 month period of inflation, Alex Hamilton at Markit Economics said.

On a negative note, market players feel that the euro zone remains the main drag on global economic growth. While Germany is contracting only marginally, steep downturns are evident in Spain and Italy. Moreover, investors do not see that last weekend's bailout of the Spanish banking system will offer any permanent solution to the problem of financial instability faced by Spain.